Brussels

FRESH concern that Scotch beef might have to be marketed in the EU after the export ban as ''British'' or ''produce of the UK'' surfaced yesterday after open disagreement between the British Government and the European Commission.

European farm Commissioner Franz Fischler's spokesman, Mr Gerry Kiely, said: ''It is quite clear - we have checked with our legal people. Under the new arrangement agreed last week, the member state where the beef is produced must be identified on the label.

Scotland is not a member state. The member state is the UK and, therefore, the beef must be labelled as such.''

This directly contradicted British Government assurances that the labelling agreement thrashed out earlier in the week by EU Ministers, including Scotland's Farm Minister, Lord Lindsay, would not affect the marketing of Scotch beef.

Last night, however, a UK Government spokeswoman here said: ''They're wrong. This labelling system is voluntary until the year 2000 and, until then, member states are authorised to put additional information on the label, including region of origin. The rules have not yet been set for the period after 2000 - regional identities are neither included nor excluded.''

A move to blur the distinctiveness of Scotch beef would be catastrophic for the industry as it tries to recover export markets worth #120m a year in the wake of the BSE disaster.

However, the Commission also signalled a way out of the procedural mess. Mr Kiely said Scotch beef with a British label could carry another marking to show its origin because of its inclusion in a Commission list of foodstuffs with ''geographical denomination''.

The list, agreed by Ministers last year, includes Orkney beef and lamb, which must come from Orkney, and Shetland lamb, which must come from Shetland. The same rule ap-plies generally to all Scotch beef and lamb.

The EU included Scotch beef in the list to afford it the same protection as Scotch whisky. This means producers of Aber-deen Angus beef in the Netherlands or even England can mark it only as Angus or Dutch or English - not Scotch.

EU agreement on the list, which includes such specialties as Jersey potatoes, Swale-dale and blue Stilton cheeses, and Newcastle brown ale, took months of negotiation. Nevertheless, it could prove a lifesaver for Scotland's beef farmers, who can expect the same protection as the makers of Champagne, which must come from that area of France.

Meanwhile, the European Parliament is threatening to sue the Council of Ministers for cutting Euro-MPs out of the decision-making process on beef labelling.

Euro-MPs, who strongly criticised the EU's handling of the beef crisis, backed a complaint by Mr Ken Collins (Labour, Strathclyde East), who de-scribed the council's behaviour as ''a flagrant abuse of democratic principles''.

They unanimously called for action against the council in the European Court of Justice. Mr Collins said: ''Ministers have learned nothing from the mad cow crisis. They have gone back to their bad old ways of taking decisions in secret.''